GET DAILY SIGNALSHoneywell (HON) Delivers +34% EPS Growth in First Post-Spin Quarter
Key Takeaways
- Honeywell delivered adjusted earnings per share (EPS) of $2.27, up 34% year over year and above the Zacks consensus estimate of $2.17.
- Net sales reached $4.99 billion, up 1% on a reported basis and 7% organically, narrowly below the $5.01 billion consensus.
- Segment margin expanded 370 basis points to 21.3%, driven by productivity, pricing, and stranded-cost reduction.
- Backlog rose 7% to nearly $19 billion, led by double-digit growth in the Process Automation and Technology backlog.
- Management raised its full-year 2026 outlook for organic growth, adjusted EPS, and free cash flow.
Earnings Context and Why It Matters
This report marked a pivotal checkpoint for Honeywell, which completed the separation of its aerospace business in late June 2026 and now operates as a pure-play automation company under the Honeywell Technologies name. The third quarter was one of the first clean windows into how the streamlined portfolio performs on its own, making margins, organic growth, and cash conversion especially important to investors. Coming off a period of transformation, the results offer early evidence of whether management's cost-takeout plan and focus on high-growth verticals such as LNG and data centers are translating into measurable financial progress. I also checked this using Tickeron’s AI Screener to see how the stock compares to others in the industry.
Reported Results
For the third quarter ended September 30, 2026, Honeywell reported net sales of $4.99 billion, up 1% on a reported basis and 7% organically compared with the prior-year period. Adjusted earnings per share came in at $2.27, a 34% increase from $1.70 a year earlier and above the consensus estimate of $2.17. On a reported basis, EPS from continuing operations was $2.40, down from $2.99 in the year-ago quarter, which had benefited from a one-time gain tied to the termination of the Resideo agreement.
Segment profit grew 23% to approximately $1.06 billion, and segment margin expanded 370 basis points to 21.3%. Operating income rose 79% to $740 million. Free cash flow increased 15% to $688 million, with free cash flow conversion of 95%. Backlog climbed 7% to nearly $19 billion.
By segment, Building Automation grew 8% organically, its eighth consecutive quarter of high-single-digit growth. Process Automation and Technology rose 8% organically, led by 14% growth in projects, though its margin contracted as expected due to project mix and the Johnson Matthey Catalyst Technologies acquisition. Industrial Automation grew 4% organically, with margin up 350 basis points. From what I see, the margin expansion across most segments points to solid execution on the cost side.
Market Reaction and Investor Sentiment
Honeywell's results were broadly well received, with the adjusted EPS beat and raised guidance outweighing the slight top-line miss. Investors focused on the meaningful margin expansion, the 34% jump in adjusted EPS, and the company's improving cash conversion as signals that the post-spin cost structure is working. The raised full-year outlook, including higher adjusted EPS and free cash flow guidance, reinforced confidence in the transformation strategy. Sentiment was further supported by the company's progress on deleveraging, as management reiterated plans to reduce gross leverage below 3.0x by year-end.
Forward Outlook and Key Factors to Monitor
Honeywell raised its full-year 2026 guidance following the strong quarter. The company now expects sales of $20.0 billion to $20.1 billion, organic growth of 4% to 5%, segment margin of approximately 20.5%, and adjusted EPS of $8.40 to $8.45, up 30% to 31%. Free cash flow is now expected to be roughly $2.1 billion.
For the fourth quarter, management guided to sales of $5.0 billion to $5.1 billion, organic growth of 5% to 6%, segment margin of approximately 22%, and adjusted EPS of $2.42 to $2.47.
Several factors will be worth monitoring in the quarters ahead. First, investors should watch whether the momentum in high-growth verticals such as LNG and data centers continues, given that orders in the data center vertical grew more than 100% year over year. Second, margin trends remain important, particularly in Process Automation and Technology, where project mix and acquisition dilution have pressured profitability. Third, progress on deleveraging and stranded-cost elimination will be key to whether the company can sustain its earnings trajectory into 2027. Finally, management noted that inflation is expected to remain elevated at least into the first half of 2027, making pricing and productivity actions critical to protecting margins. I’m watching this closely as the company moves further into 2027.
Using Tickeron’s AI Tools for Deeper Analysis
In my own research process, I turned to Tickeron’s AI Screener to quickly filter automation and industrial names and compare HON’s momentum against peers. The tool’s ability to combine technical patterns with fundamentals helped confirm the strength in backlog growth and margin trends without spending hours on manual screens. It has become a regular part of how I evaluate post-earnings setups like this one.
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Financial writer and active order flow futures trader with a focus on fundamental analysis, macroeconomic factors, and equity research. I make in-depth blogs on stocks and ETFs, bridging the gap between raw market data and real-world trading decisions.
Momentum Indicator for HON turns positive, indicating new upward trend
HON saw its Momentum Indicator move above the 0 level on October 20, 2026. This is an indication that the stock could be shifting in to a new upward move. Traders may want to consider buying the stock or buying call options. Tickeron's A.I.dvisor looked at 92 similar instances where the indicator turned positive. In 47 of the 92 cases, the stock moved higher in the following days. The odds of a move higher are at 51%.
Technical Analysis (Indicators)
Bullish Trend Analysis
HON moved above its 50-day moving average on October 20, 2026 date and that indicates a change from a downward trend to an upward trend.
Following a +2.34% 3-day Advance, the price is estimated to grow further. Considering data from situations where HON advanced for three days, in 144 of 315 cases, the price rose further within the following month. The odds of a continued upward trend are 46%.
The Aroon Indicator entered an Uptrend today. In 94 of 246 cases where HON Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are 38%.
Bearish Trend Analysis
The Stochastic Oscillator has been in the overbought zone for 1 day. Expect a price pull-back in the near future.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where HON declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 50%.
HON broke above its upper Bollinger Band on October 22, 2026. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
Fundamental Analysis (Ratings)
The Tickeron SMR rating for this company is 22 (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Price Growth Rating for this company is 64 (best 1 - 100 worst), indicating fairly steady price growth. HON’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Valuation Rating of 76 (best 1 - 100 worst) indicates that the company is slightly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (3.733) is normal, around the industry mean (-0.788). P/E Ratio (8.426) is within average values for comparable stocks, (16.776). HON's Projected Growth (PEG Ratio) (3.457) is very high in comparison to the industry average of (0.772). Dividend Yield (0.013) settles around the average of (543.841) among similar stocks. P/S Ratio (1.742) is also within normal values, averaging (2.059).
The Tickeron Seasonality Score of 85 (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron PE Growth Rating for this company is 94 (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Profit vs. Risk Rating rating for this company is 100 (best 1 - 100 worst), indicating that the returns do not compensate for the risks. HON’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 82, placing this stock worse than average.
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General Information
an industrial conglomerate which operates as a diversified technology and manufacturing company
Industry IndustrialConglomerates
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